Farmland in Uruguay

www.solution.com.uy
FARMLAND IN URUGUAY
September 2010
Advantages of farmland
Global demand for food, increasing trend
Consistent long-term appreciation
Annual cash return
Non-volatile asset
Store of value
Why farmland in Uruguay?
Transparent
market
Most suitable
country
Source: Atlas of the Biosphere
Center for Sutainabitity and the Gtobal Environment
Universitv of Wiscornin - Madbon
Types of land in Uruguay
Farms (soybeans, wheat, rice, dairy)
Cattle ranches
Forestry
Vineyards / olives / blueberries
Oceanside ranches / rural land for
development
Productivity by type of land
All of Uruguay is mapped, with soil types classified
according to their productivity
Productivity is measured by an index, known as the
“CONEAT index”
For any property, plug in the lot numbers in the
CONEAT website: www.prenader.gub.uy/coneat
The system will show:
a detailed map of the property
types of soil in different colors
productivity index of each type of soil
average CONEAT index for the property
Example of online CONEAT system
Map of the property, with
different soil types
Location of the property
Average CONEAT
index for the
property
Property number
Advantages of the CONEAT system
It allows anyone to verify the productivity
potential of a property in Uruguay
It provides a tool to determine uses for a
specific farm
The CONEAT index of a property correlates
with the price of the land. The market is
transparent, and it is easy to compare
properties and determine their fair value
The cost of land (per hectare)
USD 2,500
USD 2,000
USD 3,000
USD 5,200
USD 8,500
USD 7,000
USD 10,000
USD 3,000
USD 10,000+ ***
CONEAT index and prices
CONEAT Index
50
80
100
130
160
190
USD per hectare
1,800
2,200
3,300
5,000
6,500
8,500
Profitability by use of land
Type of use given to the land
Profitability as a % of the
price of land
Agricultural (soybeans)
12%+
(Assuming USD 400 profit per hectare of soybeans, and USD 150 of
wheat, in 12 months,)
Agricultural (rice)
10%
(Assuming JV with planter, owner obtains 30 bags (50 kgs) at USD
7,3 each for use of soil and water, per hecatre)
Cattle breeding A
7%
(Assuming per hectare: One animal per year, 140 kgs at USD
1,20/kg, net profit USD 120 per animal)
Cattle breeding B
10%
(Assuming per hectare: One animal per year, 250 kgs at USD
1,00/kg, net profit USD 210 per animal)
Forestry
13%
Buy land and lease it
3-4 %
The eastern seashore market
Rural land that has higher value due to
proximity to Punta del Este / Rocha /
Colonia areas
Not for agricultural use. Residential use
or for development
Value: USD 10,000+ upwards per hectare
Opportunities to subdivide into lots
The eastern seashore market
Taxes in farming
Farming has favorable tax treatment in Uruguay:
Income tax:
•
•
Flat 25% income tax rate (effective rate can be 10-20% according
to deductions)
For small farms, rate is lower: farms with income below USD
205,000 per year have a capped tax amount of USD 5,125
No asset tax, even if held by a corporate vehicle
Low property taxes: avg. 0.2% or less
No V.A.T. or sales tax on most supplies and machinery
No V.A.T. or sales tax on sale of farm products (except 1%
municipal sales tax on sale of livestock)
SOLUTION ALLIANCE
www.solution.com.uy
Juan Ignacio Troccoli
[email protected]
Enrique Schickendantz
[email protected]